Lawmaker Challenges Denials By Former Enron CEO SkillingBy Susan Schmidt
THE WASHINGTON POST -- washington
The sworn testimony of the bankrupt Enron Corp.’s former chief executive came under attack again Monday as the company’s former chairman prepared to cite his constitutional protection against self-incrimination and refuse to testify at a Senate hearing Tuesday.
Rep. John D. Dingell, D-Mich., ranking minority member of the House Energy and Commerce Committee, challenged Jeffrey K. Skilling’s denial last Thursday that he knew of any arrangements at the company “designed to conceal liabilities or inflate profitability.”
Dingell sent a letter to Skilling asking about his attendance in October 2000 at a partnership meeting of LJM Investments, a key Enron-related partnership run by Andrew S. Fastow, the company’s chief financial officer. The disclosure last fall of losses in two LJM partnerships and another partnership run by Fastow triggered a loss of confidence by investors that led to the company’s bankruptcy.
A document prepared for the partnership meeting shows that LJM was created to “accelerate projected earnings and cash flow” to Enron. It cited large expected profit margins from LJM investments with Enron.
The document also said Enron needed to bring in equity through transactions with LJM because its energy and communications investments did not generate earnings or cash flow in the early years. Among the investors listed are Merrill Lynch & Co., General Electric Capital Corp., Morgan Stanley and 11 other institutional investors. Individual investors were not listed in the documents.
A report by a special committee of Enron’s board said the company’s dealings with two LJM partnerships “resulted in substantial recognition of income and the avoidance of substantial recognition of loss.”
Dingell said the “extraordinary document” raised questions about “the nature and extent” of Skilling’s knowledge.